Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 226.05

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Nov 14 9:30 AM EST

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To: Duker who wrote (26801)	12/3/1998 5:10:00 PM
From: Katherine Derbyshire	Read Replies (1) of 70976

My point is that the customers of desktop software are computer users, not box makers, so the analogy to equipment breaks down. The problem with using productivity arguments to justify faster growth for the equipment companies is that it's too simplistic. For example, chip customers don't care about the fab as long as the chip delivers the performance they need. A very large fraction of the value that the chip customer perceives is due to design. Design is running into serious productivity problems of its own, as the number of transistors available exceeds the capabilities of the design software. So yes, the equipment companies can get a larger share of the production budget. But if both the production side and the design side are growing faster than chip revenue, what happens to the chip company profit margin? Katherine

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